On Capitol Hill: What’s ahead for next Congress?

By Scott Maker, senior vice president, Government Affairs

With the mid-term elections behind us, the confluence of several events will quickly pose a challenge to President Obama and the new Republican-controlled Congress. Sometimes divided government can accomplish big things, especially with a president in his last two years and in search of a legacy. Unfortunately, in recent years our partially divided government has accomplished little on major issues, and pessimists might expect a similar outcome in the 114th Congress.

We expect tax reform to be on the agenda next Congress. There seems to be universal support for lowering the overall U.S. corporate tax rate, which is among the highest tax rates in the world. There is less agreement, however, on what might offset a lower corporate tax rate. Everything is potentially on the table so we will be paying close attention to the tax treatment of employer-sponsored benefits in any tax reform discussions.

The debt limit will need to be increased in early 2015, and routine government funding measures must be enacted. In the past we have seen some brinksmanship on these issues in Washington, including a disruptive government shutdown last year. The industry will continue to communicate to lawmakers the importance of compromise and working together instead of the destabilizing behavior in recent years.

The focus will continue on entitlement reform, most immediately, the anticipated depletion of the Social Security Disability Insurance (SSDI) trust fund in 2016. Failure to address this looming crisis would result in a SSDI benefit cut of about 20 percent, something that is politically untenable given the impact it would have on disabled individuals who rely upon these benefits. While there are some short term steps the government can take to delay insolvency, a long term broader reform could include legislation to facilitate automatic enrollment arrangements for disability insurance. You may recall from previous columns that the industry has been pursuing auto-enrollment legislation to expand the number of individuals who have access to and are covered by private income protection coverage. For more information on this, see www.protectingyourincome.org.

The Republicans also fared well in state elections where they picked up two additional governor seats. In many cases, the election of first-term governors means the appointment of new commissioners in states where the commissioner serves at the pleasure of the governor. We expect to see a high-single-digit turnover in insurance commissioners.

An interesting statistic to consider is that so far this year, Congress has passed 185 laws, while the cumulative total of laws passed by state legislatures in 2014 is over 24,000. States are often willing to enact policies that would have no chance of moving in a deadlocked Washington, and we expect the states to have busy legislative sessions next year.

Despite the noise associated with the mid-term elections, the changes in Washington and in the states will have very little impact on our industry’s efforts to raise awareness among policymakers of the valuable role that financial protection products play in protecting consumers and relieving the financial burden on state safety nets. This message resonates on both sides of the aisle and enjoys the support of both parties. We will continue our efforts into the next year to ensure that financial protection products remain accessible and affordable to working Americans.

We appreciate your partnership in promoting our industry’s public policy message. If you have any questions about these issues, please feel free to contact Scott Maker in Unum’s Government Affairs department at smaker@unum.com.

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If you have any questions about these issues, please feel free to contact Scott Maker in Unum’s Government Affairs department at smaker@unum.com.